Derek Sivers Renounces his US Citizenship(federalregister.gov) |
Derek Sivers Renounces his US Citizenship(federalregister.gov) |
Honestly, the US is the most invasive government in the "free" world I've had the misfortune to encounter.
I can't think of another developed nation that is quite so overbearing when it comes to foreign income. US citizens who haven't been in the US for 40 years and work in other countries STILL need to report their income to the IRS (as an Australian who lives and works in the US, Australia doesn't care about my income as one example).
The reporting requirements on tax residents in the US (citizens and non-citizens) is absurd. If I fail to disclose my retirement account in Australia, established well before ever working in the US, the US government can technically imprison me and charge me a penalty of 300% of the value of that retirement account (all in the name of "fighting terrorism").
What really doesn't sit well with me is the presumption of criminality that exists in US law (actual and enforced). The presumption of innocence seems to be some kind of anecdote in history.
I know I'll never take up US citizenship. No thanks. I'll stick with Australia/Britain (dual citizen) thanks.
In all honesty the only reason I'm even here is because I want to see it (New York in particular) before it's gone. The US reminds me of the crumbling, dying days of the Roman Empire.
Don't get me wrong. There are many great things about the US. Up until WWI, the US opened its doors to those seeking riches, a new life, freedom from religious persecution and any number of other terrible things in the Old World. In the span of a century (1800 to 1900), the US had turned itself from an agrarian backwater into an industrial superpower, a legacy that has lasted until the present day. The US has certainly played a key part in the technological progress of the 20th century.
But now the government seems to consist of self-interested parties who are happy to persecute citizens of every country including its own. It really seems like it's lost its way and I'm not sure how it comes back from that.
Yes, it's illegal - selling drinks was also illegal during Prohibition - that didn't mean it was right.
The US actually reminds me of the relationship between the British Empire and the East India Company - the organization was so powerful that the actual government didn't have as much control over it as they wanted. It's the same with the US gov and its citizens (including corporations/businesses).
I don't know where the country is going, though. Other countries (especially in the EU) are now very close, equal or better than the US when it comes to business and living conditions, so there's really no reason to "switch sides" now.
With a British and Australian passports, you don't even need to think about a US citizenship - it is indeed useless, however if you're from one of the less developed countries , it's still worth it.
This is the key! It is the all-pervasive, highest priority plutocracy aspect that is causing the most damage to the US and its image.
When your prime concern is to treat your citizens as a tax fund and then on-top of that misappropriate those precious resources in mainly multi-decade long and continuous militaristic campaigns and development instead of socially cohesive and constructive policies that protect the long-term interests of your citizen base, then it is hardly surprisingly the amount of dissatisfaction caused, especially how citizenry itself is becoming globalised by communication and technology.
Of particular concern is:
* why banks are allowed free reign to cause so much damage without penalty or preventative regulation (e.g. now, subprime is starting all over again except in structured finance commmodity markets),
* why large corporates and high wealth individuals are so permitted to abuse accounting principles to avoid taxation even compared to the rest of the West (where do you think this tax revenue will now be sourced from?) and bypass social or environmental responsibilities,
* why political campaign funding is allowed to be so corruptingly privatised particularly at the non-federal level,
* why (highly funded) private lobbies, even of foreign governments, are permitted to be so powerful against the political system,
* why politicians are so protected in office even when they behave in ways that would be illegal in any other situation (e.g. trading based on inside information),
* the extreme lengths the "multicultural experiment" has been allowed to segregate and ghettoize their citizenry,
* the extreme punishment and lack of tolerance for even the most minor of crimes in the legal system, etc. etc.
Given the above, it is hardly surprising that US citizens are both turning to and incidentally discovering the many benefits of living elsewhere and dissociating themselves from their parent country's government.
While I agree that the US isn't as welcoming as it once was and has always had an onerous tax code, for foreigners it is still a huge benefit to work and do business there.
The funny thing is that Citizenship in the US has been essentially devalued by non-citizen working categories that have been developed in order to make the economy function. Unlike Europe or Canada, the US as a country doesn't really provide anything substantial to its citizens that make moving from a green card to a full citizen really worthwhile unless you care that much about voting.
Green Cards (or equivalent legal status) are gold though. Save the passports for EU countries or CAN/AUS. :-)
Indian here, many of uncles visited US in the 90's and continue to visit even now. One of my uncles is a doctor who is now settled in US. Well as a kid my uncles would often talk to me about the infrastructure, opportunities and great things about the US. So naturally when I grew up I wanted to come to US and work there.
Not anymore, in the past few years the very same people are telling how futile it is to go to US now. How costly the cost of living and health care is, how the common masses are totally out of energy without access to affordable higher education, how china virtually dominates every aspect of the life of a ordinary US consumer.
You can do anything here in India, whatever you could possibly do in the US. Nothing really is impossible today in India and China. You can make the same money, get the same opportunities, buy the same stuff and afford the same luxuries. Many of my friends who went to US to their MS now desperately want to come back to India, the only thing that seems to be holding them back is the education loan.
India looks to be in the same place US was in WWI, tons of opportunities, high optimism among the masses and a lot of young population desperate for success. There is tons of money to be made out there.
US looks to be stuck in needless conflicts, prolonged wars and wasting its energy, resources and wealth on pursuits which are going to give nothing in return.
People generally ask about the resurgence of India and China on the global scene, sure outsourcing is huge factor in it. But US really dug its own grave. If even US had spent half the money its spending on military and wars on development, with the kind of infrastructure US has, it would be unbeatable.
Thank god you got there in time! NYC TTYL is down to 5 years. Probably won't be there in 2020.
"But now the government seems to consist of self-interested parties who are happy to persecute citizens of every country including its own."
When has this not been the case in US history?
Sounds like you buy into the same "in the old days, things were better" pollyanna version of US history many of its own citizens do.
But that's because in the old days, I was 12.
Going out and living in other countries you find how impressively different things can be.
For instance, an acquaintance of mine who is a medical doctor who treats terminally ill patients, had his life ruined (and is in jail now) because the DEA decided he was writing too many prescriptions. Those same drugs- that he determined were medically necessary and he's a DOCTOR, can be bought over the counter in Chile, and many other countries south of the US border. Walking around chile you don't see a lot of stoners or drug addicts (in fact, I haven't seen any homeless at all) compared to the USA.
Nevermind that the person who decided he was writing "too many" of these prescriptions has no medical training and was doing so based on what amounts to a quota system whereby over time patients are increasingly denied the drugs they need as their doctors become afraid of the same fate that befell my acquaintance. This fear causes fewer prescriptions to be written over all, lowering the standard for "too many", causing those who didn't deny their patients the drugs they need to be prosecuted, installing more few, further lowering the numbers, etc. It is a self reinforcing cycle.
So, please tell me why a doctor had his life ruined for giving his patients- terminally ill, remember- prescriptions for drugs that you can buy over the counter in many countries? Please tell me why the USA is pursuing a program that ensures that ill people are in agony?
It is because the USA has gone off the deep end in certain areas.
Yet attempting to defend this doctor to others who also went to high school with him, mostly got no sympathy. To those americans' eyes he was a "Drug dealer" and a "scourge on society."
Beligerence of the "State" knows no bounds, I hope we can free ourselves from this regressive construct and, once again, live in this world judged by our own merit and character, beholden to none.
Also if they don't do this. It pretty much guarantees that any wealthy individual will leave the country for a tax haven. Say you reach a $10M/year income if your tax rate is 30% in US, given your financial status, it would be very easy for you to move to Mexico or another country and just say "Well, I am not in US anymore, can't tax me".
Now in actuality this is already happening. They are just making it harder. They are trying to plug the holes in hunk of Swiss cheese.
(a) this is public info online, and; (b) it's apparently public because, of all things, HIPPA?
It seems rather useless to simply troll government websites for "revealing" data and make no other comment about it. We can add nothing to this data point beyond conjecture without understanding why a person makes this decision.
EDIT: So people have figured out that he's moved to Singapore and married a Singaporean, which makes perfect sense given their stance on citizenship in general.
I know a Singaporean - they don't like losing citizens. Namely, because of the extensive government involvement in their lives in the form of everything from social services to national ID cards to military service. The approach is a much different path of democracy than what we'd be used to in North America.
In that case though, given Singapore, it's a good middle ground between India and the US culture wise.
Tax purposes, political protest, or what?
Also: it's funny that the government misspells the acronym of their own law, HIPAA.
Also, political innuendo aside, Sivers doesn't mention tax avoidance in his reasons for moving to Singapore: http://sivers.org/singapore
He put the company into a charitable trust, which isn't ever taxed except for on what he receives from the trust, which is set to the lowest amount possible.
My general sense on the issue is that money, in particular taxes, is something Derek worries about.
Short link: http://goo.gl/0vEQj
It would certainly be within the rules for Congress to just pass spending and revenue bills separately, but it would be politically difficult.
Thanks.
Again, thanks for responding.
In addition, if you're captured in the United States and labeled a "terrorist," you're less likely to be tortured and held in "black" facilities if you're a U.S. citizen. Perhaps not an optimal reason, but it still exists.
EDIT: In case people are interested, my nationalities are: Dutch, German, Canadian. I was born with all three of them (even though I found out only much later). I would loose both my Dutch and my German citizenship if I were to acquire another one.
My parents sacrificed an incredible deal to come to the US. For the life of me I can't comprehend why someone would do this. Loss of citizenship is permanent. Your kids lose it as well. Why would derek would do this to his kids.
Maybe he doesn't want his kids to have to deal with the U.S. I.R.S. every year of their life, regardless of whether or not they live in the U.S.? Just one of the possible reasons.
Perhaps he has decided to obtain Singapore citizenship? Singapore requires those who obtain naturalized citizenship there to renounce all other citizenships they hold.
"Juxtaposing these three theories of the rule of law allows us to see that there is something deeply anomalous in HavenCo’s simultaneous rejection of national self-government and embrace of formal legality and restraint on government. Having started from the premise that the political systems of existing nations could never be trusted to protect free speech, HavenCo needed a place outside of them to stand while it beamed its bits their way and undermined their national Internet laws.
That place needed to be able to stand up to annoyed nations, which led HavenCo to seek Sealand, with its colorable claims to sovereignty. And once HavenCo had chosen a protector with power, it also needed to be protected from the abuse of that power. HavenCo expected international law to protect it from the rest of the world and expected Sealand law to protect it from Sealand itself."
We can discuss and agree that people have fundamental rights, but having that discussion only makes sense in the context of establishing a way of enforcing those rights. The day you hold 'no' citizenship is the day that nobody is going to help protect your rights and you become someone else's slave. That isn't a day I would look forward too.
[1] http://arstechnica.com/tech-policy/news/2012/03/sealand-and-...
btw: how is the custom board patrol treating you when you cross? some countries like in US while pulling up your name they can see all nationalities you have. I would assume they are hostile towards you in some way, right?
How does a third world tell US which are its citizens. Doubt there is a global citizenship database? Is there?
Some just optimize based on the most travel permissive citizenships. Like, say the British passports let you in quite a few countries without a visa, so does an US passport but the countries are different.
Apparently this falls under IRC 6039G, which appears to have nothing to do with HIPPA?
Notwithstanding any other provision of law, not later than 30 days
after the close of each calendar quarter, the Secretary shall
publish in the Federal Register the name of each individual losing
United States citizenship (within the meaning of section 877(a))
with respect to whom the Secretary receives information under the
preceding sentence during such quarter.
This doesn't make sense until you consider they're probably just bitter about lost taxes.
Another reason to make them public is that otherwise there's no way to determine if someone is actually a U.S. citizen, since there's no central register. For example, someone with a birth certificate showing they were born in the U.S. is a U.S. citizen by birth... unless they've renounced it. So to determine if someone is a citizen you need: 1) a copy of their birth certificate; and 2) a list of renunciations so you can check that they aren't on it. Sort of like how key revocation works in crypto— you can't actually haul back the original documents, so you have to publish a revocation list.
IE HIPAA will cost the govt money, which will be offset by such and such provisions for raising revenue, including changes to the rules for taxing expatriates who renounced their citizenship for tax avoidance purposes.
According to sources I could find online [2], it looks like prior to the law, people who gave up their citizenship were not required to report it to the IRS, even if they were doing so in order to avoid taxes (which is illegal [3]).
[1]: http://www.gpo.gov/fdsys/pkg/PLAW-104publ191/html/PLAW-104pu...
[2]: http://www.accidentaluscitizen.com/category/citizenship-renu...
[3]: http://www.irs.gov/businesses/small/international/article/0,...
As far as as HIPAA, I was slightly surprised too (although I must say, not very surprised). The long title of HIPAA is "An Act To amend the Internal Revenue Code of 1986 to [lots of stuff about health care] and for other purposes." This definitely falls into the "for other purposes."
http://personalinsure.about.com/od/health/a/Hipaa-Definition...
I'm not really sure what you're referring to but I am curious.
Denmark is another country with a similar law, which causes a reasonable amount of angst among Danes reaching that age. Particularly true of those with US/Danish citizenship, because once you renounce one or the other, it closes off a lot of options: being a US citizen can be quite good for a lot of career paths, while being an EU citizen can open up a lot of options in a different direction.
edit: Looking into a bit, one thing making Denmark's law somewhat less draconian is that former Danes who lose their citizenship via this process at age 22 still have some kind of special lifetime Danish work/residency permission. So they could opt for the U.S. citizenship while retaining the option to return to Denmark. They would lose the right to live/work in other EU countries under the freedom-of-movement agreement, though, since they'd no longer have an EU passport.
So it seems the only way to not do this is renouncing citizenship.
Look at my daughter. She was born in Europe with three nationalities, including American. Say, for the sake of argument, she spends her entire life in Europe. She will nevertheless be expected to file a tax return with the IRS every year, to possibly pay US taxes, and to file an FBAR every year should she have more than US$10,000 in the bank.
(At the moment the requirement to pay US taxes generally only kicks in if your income exceeds certain thresholds, but given the lack of esteem Congress has for overseas US nationals I would not be surprised if the rules governing this became more onerous.)
These requirements are simply unconscionable for somebody who has never received and will never receive any services from the US government. And yet they will be imposed on her, unless she takes concrete action when she turns 18 to renounce her American citizenship - because she has US nationality, whether she likes it or not, along with the insane obligations that come with it.
Rant time: I despise what political discourse in this country has become. Rather than talk about policy we've trained everyone (like marshallp here) to regurgitate sound bites about how this or that politician is "gonna go all out" to do whatever evil thing sounds fun this week. Look: tax policy is a bunch of boring laws. You can read them if you like. You can look at proposed laws and make suggestions, and argue with the specifics of what our government is doing or what it proposes to do.
But slinging around loaded terms like "taxing entrepreneurs" or "lazy government workers" is hurting us all, and helping no one but the spin doctors. Stop it. Try to be smarter than that.
Edit: more spin terms from the reply: "out of our wallets", "my money". Spin if you want, but if you try to argue about policy using language you got from cable news, you'll merely perpetuate the current policy situation (designed almost exclusively to cater to the attention spans of cable news viewers).
So is that like a very mild dislike or something? Otherwise, that sentence makes zero sense.
The assumption, though, is probably correct far more often than not.
Every year around this time I stare at a stack of tax paperwork and contemplate the hours out of my life I'm about to lose to end up with a tax return that ends with "0" on the bottom line and I get sorely tempted.
Every year I also wonder if it's going to be the last with "0" on the bottom line. The foreign earned income exclusion this year is $95,100. My salary's higher than that. So far I'm always managed to make up the difference on the foreign housing exclusion, but sooner or later I'm probably going to end up being expected to cut a check to Uncle Sam.
Renouncing costs $450. Once my American tax bill hits that amount, that's probably me making an appointment at the embassy.
Let's be clear: I haven't set foot in the United States for ten years, and I will never move back. I hold an EU passport. I receive absolutely nothing from the United States. Being forced to file intrusive, time-consuming paperwork every year is bad enough, but having to actually pay taxes would be simply unacceptable.
Here's an article going back to 2003: http://www.opioids.com/offshorepharmacy/deapaindoc.html
Here's one on 2004: http://doctordeluca.com/wordpress/wod-pca/
Doctor's opinion from 2008: http://www.healthcentral.com/chronic-pain/c/91/46424/prescri...
A briefing to congress from 2004, contains many useful references: http://www.aapsonline.org/painman/paindocs2/libbystatement.p...
Doctors shirking their duty due to fear of persecution via prosecution: http://www.doctorgorrell.com/a-bad-time-to-be-a-chronic-pain...
Article about how the fear is causing doctors to resist adequate remedies: http://www.healthsearchonline.com/doctors-prescribing-pain-m...
The white house is calling it an "epidemic": http://www.whitehouse.gov/ondcp/
After all, it's not a burden on his children until they begin collecting income. If the concern is really for the children, it would be more pragmatic to give them sufficient time to make up their own mind.
No. Parents cannot, under any circumstance, renounce US citizenship on their childrens' behalf. If they gained citizenship at birth, they can only lose it by their own actions.
I could imagine someone holding so many citizenships would be very valuable asset to government agency that hire spies.
http://en.wikipedia.org/wiki/UKUSA_Agreement
"The United Kingdom – United States of America Agreement (UKUSA, /juːkuːˈsɑː/ ew-koo-sah)[1][2] is a multilateral agreement for cooperation in signals intelligence among the United Kingdom, the United States, Canada, Australia, and New Zealand."
They wouldn't necessarily know about others if you got the American one by birth, though if you were born abroad you can be sure that's going to be in the profile.
Germany has always been a "jus sanguinis" country, meaning that the basic principle of its nationality law is blood descent. This stands in contrast with "jus soli" countries like the United States where the basic principle is place of birth. A child born in Germany is not automatically a German national. It used to be that birth on German soil was completely irrelevant to questions of nationality, but children born in Germany since 2000 can acquire German nationality by birth if one of the parents was a long-term permanent resident. I question whether a military baby would qualify, as a soldier stationed in Germany would presumably not be there under a German permanent residence permit.
Assuming for the sake of argument that your son did have German nationality, he would certainly be subject to the draft - if it still existed. Germany ended compulsory service last year. But this does point to a larger issue: anybody with multiple nationalities is fully subject to all the legal obligations imposed on citizens of each country.
(I am not an immigration lawyer, but I've sent a lot of time researching nationality issues. I've also spent some time in German embassies: I have a German wife and a child who is therefore also German by virtue of jus sanguinis.)
Also, I will note that the son in question is in his early twenties. So it sounds like he is not a dual citizen and does not need to worry about the draft..etc.
Again, thanks!
Have a look here: http://www.auswaertiges-amt.de/EN/Infoservice/FAQ/Staatsange...
(I need to ask the family, I remember it being more than 30k)
[1]: http://www.nytimes.com/2012/05/08/world/asia/kidnapped-ameri...
So it's OK for people to pool capital into companies and abuse workers, but it's not OK for workers to pool labor into unions to prevent it?
Here's the snopes page on that very tax: http://www.snopes.com/politics/taxes/realestate.asp Amusingly, the spin it's trying to fight is that it's a tax on "home buyers". Apparently the "entrepreneurs" angle is a new one.
It's a tax. Is it a bad one? Dunno, I think on balance an increase in the capital gains rate (which is sort of what this is) gated on income level isn't a bad way to raise that revenue. You have a different suggestion?
Maybe not being associated with that (or at least not as much) is another of Sivers' reasons for renouncing...
Edit: removed the "zero tax" bit as apparently it sounds like spin. I don't think it changes the point. (was: ", even though no one sane thinks a zero tax policy is possible")
There are many kinds of spin, that's one of them.
In what country? In the US, most are mandated by law. All government jobs are union, regardless of the wishes of the worker.
Contracts are mutually consented to. If it's a union job, you have to be a part of the union. How is forcing workers to do something they do not want beneficial?
I'm all for unions where someone can join and leave freely without the threat of force or loss of work. Do we have that in the US? No.
As far as Union jobs go, it depends. There are Union jobs that require it and don't require it. However, this has nothing to do with the worker, but is actually a contractual obligation that the employer agreed to.
[1] http://voices.washingtonpost.com/federal-eye/2011/01/federal...
As a U.S. citizen you are required to pay taxes on income earned worldwide and from my understanding you can only deduct up to ~95k in 2012.
From what I've read, being a US citizen and working abroad is expensive and one of the main motivations for people to renounce their US citizenship.
So if you live in a higher tax jurisdiction (i.e. the majority of the countries in the world), your US tax bill ends up being $0. However, you still have the hassle of filing your US tax return each year.
i.e. Mutual fund account - $32K
The devil is in the details. I wonder what that figure would look like if you excluded part-time workers like, say, the census workers who are collecting the very data you cite?
> However, this has nothing to do with the worker, but is actually a contractual obligation that the employer agreed to.
Nope. The last time an employer "agreed" to a union was probably a century ago. Federal law mandates how the process is handled and the employer doesn't agree to anything. It is forced on him.
Which is fine.
What isn't fine is that it is forced on the workers too, even if they don't want it. And every worker after them.
Not cool.
Federal unions have complained that their low union membership totals is due to the federal government being the largest ‘right-to-work’ employer. Right-to-work allows an employee to determine whether he or she wants to join a union. It also keeps employers from making union membership an employment prerequisite.
Via: http://ohmygov.com/blogs/general_news/archive/2009/02/02/a-l...
See also:
However, the most important aspect to having a federal union membership is the collective bargaining agreement. This agreement is a contract between an employer and the union which terms of employment are negotiated and adhered to by the employer and the union. These terms can be about the hiring process, salary, working conditions employment termination, work hours or employee grievances. A union represents the employee to ensure that the employer does not violate the collective bargaining agreement.
There is a long list of things up for negotiation. It seems to me that very little is being forced on anyone.
and
Also, federal unions cannot compel a non-union member to become a union member; to pay union fees or make union membership an employment precondition. As a result, federal union membership numbers are relatively small in comparison to the overall size of the federal civilian workforce.
Again, no one is being forced into anything again. They can't even establish union only jobs.
via the same link.
Ambition is what drives humanity forward, for better or worse. Unless you can channel the needs of the state as a replacement for personal ambition, your society under communism is unsustainable. This is very difficult to do without reverting to a society that is either 1) capitalist or 2) utterly corrupt.
Either way, communism is self defeating, and therefore dangerous.
EDIT: Just to note that I upvoted you and encourage others to do the same. This is a place to share knowledge and you asked a perfectly valid question that many people have. This is not reddit and nobody should be downvoted for asking a question, regardless of how basic it might be.
It really doesn't matter if they are or not. In order for communism to truly work, you'd need to abolish all rewards. That is, the very act of having hockey players and cosmonauts and musical talent recognized by the state at large - regardless of financial reward - creates the very imbalance that communism is supposed to address. As I said: self defeating.
People may seek different rewards based on their character, but the very nature of man is that we work best when challenged and respond will to the rewards earned when overcoming those challenges, financial or not.
If your economic system essentially requires a man with a gun to ensure and enforce its existence, there is something wrong.
To put it simply - when all the wealth is equally spread, there is no incentive for anyone to do anything. If everyone is paid equally and has the same benefits, there's no point in working harder or smarter - you just do the bare minimum and be done with it.
Let's take a capitalist factory: workers are paid $5 per assembled iPad. Those who want more money can assemble 100 iPads and make $500 in a day's work. Most are happy with $100 per day, so they'll assemble only 20 iPads (let's say that's the minimum amount required).
Now a communist, state-operated factory: workers are paid $100 per day because everyone is equal. Those who want to make $500... can't, even if they assemble 1000 iPads. So they just assemble the bare minimum of 20 and are done with it, secretly cursing the government for this injustice/inequality (how ironic is that?).
The overall production level drops significantly unless the state raises the minimum amount of iPads made to 100 per day. Obviously, the people who are happy with $100 per day are now pissed off, either because they don't want or simply can't work that hard.
The only ones benefiting from communism are those who make the laws and control the factories/country.
I don't think this is true in general, though it's true for some jobs (mostly jobs that nobody wants to do). For example, I don't think scientists, or even most HN types, are motivated solely by money, and would just sit around drinking beer if they couldn't make more money. Many of us are more motivated by science and technology. Making money is nice, but I would still work on tech if it made absolutely no difference to my salary. The reward is finding interesting things, gaining recognition for my ideas from my peers, etc., not just some monetary bonuses.
If anything I think there's a slight negative correlation between in-it-for-the-money and quality in science. The people who are there to optimize money are usually good game-players, adept at working the system and working their way up bureaucracy. Brilliant scientists often aren't even very good at that, and are more often really driven by the science first, perhaps peer recognition second, and maximizing money a distant third.
I think you are confusing a "planned economy" with "communism." But even then, there is nothing in the definition of a planned economy to say that all people in a certain position have the same daily wage. The Soviet union had an incentive system. For example, http://www.tandfonline.com/doi/abs/10.1080/09668134908409742 says "encourages the foremost collective farmers by means of adding extra labour-days."
You idealize the idea of the piece-rate system, without realizing that that's the system used in the Soviet Union during the Stalinist era. Read in http://en.wikipedia.org/wiki/Wage_reform_in_the_Soviet_Union... how the Khrushchev era reform movement pushed to move from a quota system to "standardising their wages and reducing their dependence on overtime or bonus payments."
From that page, "The piece-rate system led to an enormous level of bureaucracy and contributed to huge inefficiencies in Soviet industry. In addition, factory managers frequently manipulated the personal production quotas given to workers to prevent workers' wages from falling too low."
So it seem that your "capitalist factory" is using the same piece-system incentive system as used during the Soviet era, which is about as communist as you can get.
I also think you are confusing "capitalist" with "meritocracy." The US during the period of slavery was under laissez-faire capitalism, but quite obviously slaves did not enjoy the same benefits which you attribute to capitalism, and a slave working the same job, with the same abilities as a free man was unlikely to make the same rates.
You write "Obviously, the people who are happy with $100 per day are now pissed off, either because they don't want or simply can't work that hard." Or they might put their family life ahead of the company's bottom line and think that 40 hours of week is enough even if some people want to work 80 hour weeks.
Finally, you wrote "The only ones benefiting from communism are those who make the laws and control the factories/country." There's nothing unique to communism there. The same holds with capitalism. If only the richest 1% in a capitalist country make the laws and control the factories/country, then it's very likely that they are benefiting the most. The economic system and the form of government are not as strongly coupled as you suggest.
There you go, I think I fixed communism.
Vouchers == Church Indulgences == Dollars
http://en.wikipedia.org/wiki/History_of_communism http://en.wikipedia.org/wiki/Great_Purge
If you'd prefer text here's one: https://thesnarkwhohuntsback.wordpress.com/favorite-passages...
Even within a strongly capitalist system like the US, being motivated by things other than money actually used to be closer to the norm for a large number of professionals. The current situation where people change companies a lot, get large bonuses, and have widely differential pay, is a pretty recent phenomenon. At Bell Labs, everyone got fairly similar salaries, despite the fact that some people were much more successful in research than others. Of course, you had to be at a certain level of success to get there at all, but once you were there, you just got the normal Bell Labs salary, with raises tied to seniority, old-corporate-style. Yet many people there excelled anyway, despite the fact that they could've sat around pulling the exact same salary without putting in much effort. Why? Because they were motivated by things other than money, I would guess.
Yes, I admit, I can be slow on the uptake... Sorry. :)